Check you’re not making these common mistakes when you calculate fringe benefit tax (FBT).
Make sure you’re up to date with the rules, rates and legislation changes for:
- calculating and paying the right amount of FBT
- applying the correct exemptions, thresholds and limits.
The calculations to work out fringe benefit tax are based on the types of benefits you provide to your employees. There are different rules for employees, shareholder-employees and major shareholder-employees.
Working out the taxable value for motor vehicles
Some errors in working out the taxable value include:
- calculating motor vehicle valuation methods incorrectly
- using incorrect information to work out the days vehicles are available for private use
- applying employee contributions incorrectly when working out the taxable benefit
- incorrectly applying work-related motor vehicle exemptions.
Exemptions for work-related motor vehicles
Work-related vehicles are only exempt from FBT if they meet certain requirements.
Utes may be considered work-related as they are dual purpose vehicles, but this does not mean they are automatically exempt from FBT.
Find out more about FBT on motor vehicles.
Motor vehicles provided by employers for private use
For more information, go to Part 2 - Motor vehicles in the Fringe benefit tax guide - IR409.
GST on fringe benefits
For fringe benefits that are not motor vehicles, the calculation is on the GST-inclusive benefit value unless the benefit is exempt from GST.
Examples of common errors:
- including GST on exempt benefits such as loans to employees
- calculating GST on the FBT value, instead of the taxable benefit value
- incorrectly calculating GST on adjustments when your business has exempt, zero-rated or mixed-use supplies.
The fringe benefit value is the amount that you pay FBT on. GST is also calculated on the total FBT payable for all the types of benefits you provide, less any exempt, zero-rated supplies or other adjustments.
Employee contributions to fringe benefits
When employees contribute payments towards a fringe benefit, the taxable value is worked out on the benefit less contributions.
The taxable fringe benefit value and the amount of FBT payable are both affected when employee contributions are not correctly applied.
Fringe benefits for shareholder-employees
Fringe benefits provided to shareholder-employees and major shareholder-employees may be different to benefits provided to other employee types. Make sure you’re using the right FBT rules for the employee type.
To find out the different types of employees, go to Part 1 - General terms of the Fringe benefit tax guide – IR409.
Alternate rate calculation
The single rate is 63.93% and the alternate rate is 49.25%.
For quarterly filers, if you use the alternate rate of 49.25% in any of the 1st 3 quarters, you’ll need to do an alternate rate calculation in quarter 4 (ending 31 March). There are several alternate rate calculation options to choose from.
For more information, go to Part 7 - FBT calculation options in the Fringe benefit tax guide – IR409.
Calculation options and rates for FBT
If you've made a mistake
If you've made a mistake in a return, you can fix this in myIR.